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The operations processes involve taking inputs (like plastic pellets that go into LEGO blocks), and then through the transformation processes, create outputs (the goods or services for sale- like the LEGO sets sold to customers)
Inputs
-Transformed resources (materials, information and customers)
-Transforming resources (human resources and facilities)
Define
Define
TransformED Resources - an input into the production process which is used up or transformed in some way during the production process
TransformING Resources- a resource which is used to act on transformed resources in order to produce the output
There are four common direct inputs ...
There are four common direct inputs ...
Labour
Energy
Raw Materials
Machinery and Technology
These Inputs can be divided into those resources that are transformed or those that are transforming.
•Transformed resources include:
Materials and intermediate goods
Information
Customers
•Transforming resources include:
Human resources (labour)
Facilities (plant factory or office)
Inputs in the construction of a Boeing 787
What TRANSFORMED inputs can you see?
What TRANSFORMING inputs can you see?
TransformED Resources
TransformED Resources
Transformed resources need to be sourced by operations and then transformed by transforming resources into the outputs of the business.
Use the acronym MIC: materials, information and customers
Materials
Materials
the actual physical inputs used in the production process include:
Physical raw materials- for example the plastic pellets for the manufacturing of LEGO bricks, wheat used in the production of bread, or woodchips used by IKEA to manufacture particle board for furniture and bookcases.
Energy- electricity used to power machinery in order to act on the raw materials
Completed components purchased from other businesses- for example LEGO purchasing the printed cardboard boxes from another business in order to manufacture the sets.
Information
Information
The value of information lies mainly in its ability to influence behaviour or decision making.
For many service based businesses it is the information that is the input which is transformed in the operations process. For example Information provided as an input to a doctor, financial planner, accountant, engineer or architect. The information is the used by the business in order to be transformed to an output- which may be a budget, investment recommendation or specs for a bridge or building.
Internal
Internal
Internal information comes from within the business and is gathered from internal sources such as financial reports, quality reports, and internal key performance indicators (KPIs) such as lead times, inventory turnover rates and production data.
Internal information acts as a transformed resource when it informs processes and creates process improvements.
External
External
External information is generally an independent source for operations managers to use and integrate into the operations process It can come from market reports, statistics from industry observers and industry bodies, official government statistics from the Australian Bureau of Statistics (ABS), media reports, academic papers etc
Example: information on new technologies can influence which machinery and technology is purchased and how it is applied to the operations function
Customers
Customers
Customers are also an input because it is their needs and desires that ‘drive’ the operations of the business.
For many service based businesses it is actually the customers of the business that are transformed n some way. For example, a customer getting their haircut is a transformed resource for the salon. Similarly, QANTAS customers are transformed by being moved from one airport to another.
Case Study Example
Case Study Example
Service
Qantas is involved with transporting customers
Materials in the form of aviation fuel will be used.
Information about flights, destinations, bookings and maintenance will be used.
Customers determine what type of service they desire, ranging from first-class seats to budget economy seats, and are transported to their new destination.
TransformING Resources
TransformING Resources
To transform the transformED resources into to outputs for the business, operations must use tranformING resources which act on the transformed resources.
Human Resources
Human Resources
Many businesses recognise that employees are the single most important input into business.
This is because the skill, knowledge, capabilities and labour of people is applied to materials to convert them into goods and services.
There is a very important relationship with the human resources function to provide the business with suitably qualified, skilled and experienced employees.
Well designed HR policies and practices can improve the operations process.
Facilities
Facilities
Facilities refer to the plant (factory/buildings or office/land), machinery, equipment and technology used in the production process.
They are the non-current assets of the business which are used to generate an output and hence business profits.
Non-current assets are assets purchased by the business to use and are not intended to be converted into cash within the next 12 months.
Machinery and equipment will be used to physically change the shape and features of the materials.
Major decisions in regards to facilities include:
The design layout of the facilities
The number of facilities required
Their location
Their capacity
Case Study Example
Case Study Example
Qantas uses a combination of human resources (i.e.) pilots, maintenance engineers, flight attendants, cleaners, baggage handlers, aircraft refuelers and check in staff and facilities (i.e.) aircraft, hangers, terminals and a computerised booking system to covert the transformed resources into the service they sell.
Activity
Activity
Your Turn!
Your Turn!
Watch the IKEA clip and identify transformed resources and transforming resources for the particle board (and ultimately the red bookcase)
Chapter 2, 3 (to 2 mins), 4
2018 HSC Question
2018 HSC Question
Which of the following lists three examples of transformed resources?
A. Customers, information, materials
B. Facilities, information, technology
C. Customers, human resources, materials
D. Facilities, human resources, technology
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